Readers' comments

This article omits an important fourth player in the deal: Bank of America. Their $21 Bn acquisition of LaSalle Bank, the retail and commercial banking division of ABN AMRO based in Chicago, was a crucial component of the ABN AMRO buyout. An abbreviated history: The original bids were a lower-value offer from Barclays that called for divesting LaSalle to Bank of America, and the €72 Bn offer from the consortium that required retaining LaSalle. ABN AMRO's management preferred the Barclays offer, as it kept the Dutch bank more cohesive, and they proceeded with the LaSalle divestiture. Shareholders sued, claiming such an important transaction required their approval. The Dutch courts eventually ruled that the LaSalle divestiture was allowable and could proceed without a vote. The consortium responded by maintaining their higher bid, but without LaSalle. Barclay's could not match such a generous offer.The consortium's reluctance to back down after losing the court battle may have been a mistake. It now appears that they overpaid. This is an illustration of the winner's curse.Has there been any insight as to whether LaSalle is performing well for Bank of America?

I agree with Mr. Boyle's comment on the fourth player (Bank of America) but there's also a Fifth player who cannot be ignored. Such is the role of the central bankers who irresponsibly allowed the whole thing to happen.At the time the final consortium offer was presented to the market (even after losing the Lasalle legal battle), most ABN AMRO executives (the only ones who really knew what the valuable pieces of the bank were) noted the deal was smart for Santander, bad for Fortis (transformational yet irresponsible) and catastrophic for RBS, who was buying either "nothing" (unprofitable units with insignificant market shares like BU Asia, BU Europe, BU Spanish Speaking Latin America, BU Global Clients) or "trouble" (BU Global Markets, management of residual bank). Such analysis was quite evident in July 2007, prior to the collapse of credit markets. Fortis and RBS have recently raised capital but have not written down, even partially, the goodwill of the ABN AMRO acquisition. Unfortunately, the biggest test is yet to come...the huge goodwill Fortis and RBS still carry on their balance sheet (by paying circa 30 times the book value of the acquired assets as the article well describes), can only be sustained (e.g. not written down) by passing a series of impairement tests based on the profits and synergies generated out of the acquired ABN AMRO businesses. Strangely, the markets are not informed at all about that, other by comments like "the integration is progressing well". RBS and Fortis should be transparent to investors and depositors on that and take the hit once and for all. By the way, the same goes for MPS, who carries goodwill attributable to the Antonveneta acquisition equivalent to a very large part of its capital. So, the fifth and most important actor in this analysis, other than arrogant CEOs and misled shareholders who approved the acquisition are Central Bankers. The whole acquisition was possible thanks to the authorization ofthe various supervisors. All central bankers allowed significant leverage of Fortis, RBS and MPS by simply choosing to ignore the fact that goodwill now represents a very significant portion of the capital of those entities. If the goodwill was written down (even partially), the three entities would be significantly below the minimum capital ratios required by law. Is this the new role of Central Banks under Basle 2?